Sources familiar with the matter said that the two players have been negotiating over valuations. They also stated that SoftBank’s founder Masayoshi Son is trying to find big investors for Arm, as SoftBank has plans to liquidate its stake.
As per the latest report on Wednesday, July 12, chip manufacturing giant Nvidia has been in talks with industry peer Arm to be an anchor investor in Arm’s IPO listing on the New York Stock Exchange. As reported by the Financial Times, the listing shall happen as soon as September this year.
Thus, Nvidia joins the bandwagon as different companies are currently in talks with Arm to secure long-term staking in the chip designer ahead of the initial public offering. Over the last few months, Arm has been talking to more than 10 companies, including big names such as Intel.
As per the latest report, both Nvidia and Arm have been negotiating over Arm’s valuation. Nvidia would prefer a stake that would value Arm anywhere between $35 billion and $40 billion, as per one of the sources familiar with the matter. On the other hand, Arm is seeking a valuation of $80 billion, said the source.
Regulators rejected Nvidia’s $66 billion acquisition of Arm last year due to concerns about competition. This time, Nvidia and Arm have proposed a much smaller investment in the range of hundreds of millions of dollars. They have also reached out to regulators in advance to address any concerns and alleviate fears, as per sources familiar with the matter.
Why Anchor Investors Are Important for Arm
Financial Times reports that bringing anchor investors aboard is important for Arm to help support the stock as earlier backer SoftBank looks to liquidate its stake. Numerous private tech companies and their advisors are closely monitoring Arm’s IPO launch in 2023, especially after a decline in new listings over the past year.
In challenging IPO markets, it is common for companies to secure the backing of anchor investors in advance. This strategy helps ensure demand and provides reassurance to other potential investors.
Sources familiar with the matter said that SoftBank’s founder Masayoshi Son is trying to find big investors for Arm before it goes public. He wants to increase Arm’s revenue before the IPO. SoftBank declined to comment.
Nvidia is already a customer of Arm, but it wants to invest in the company to expand its business. Nvidia currently makes graphics processing units (GPUs), which are dedicated chips for accelerating specialized tasks like 3D rendering and training artificial intelligence. By investing in Arm, Nvidia could get into the market for central processing units (CPUs), which handle most other computing functions.
Nvidia, the first chipmaker to reach a $1 trillion valuation in May, recently produced its first central processing unit (CPU) using Arm’s designs. The CPU is part of a “superchip” called Grace Hopper, which is designed for artificial intelligence and high-performance computing.